Less privacy for moving money

U.S. considers making banks reveal all international wire transfers

July 12, 2006|By RICHARD B. SCHMITT | RICHARD B. SCHMITT,LOS ANGELES TIMES

WASHINGTON -- The Bush administration is considering requiring banks, for the first time, to inform the government of all their customers' international wire transfers, regardless of possible terrorist ties, a Treasury Department official said yesterday.

Such mandatory reporting would mark a major expansion of the government's efforts to comb financial data to fight terrorism and other international crimes. Depending on how the program is structured, it could mean that banks would be forced to turn over data on millions of transactions that they are now required to keep secret.

The department has been studying the feasibility of such a project since early 2005, when the idea first surfaced in news reports. Congress ordered the study in late 2004 as part of a plan to reform the intelligence community.

Officials now say they are within a few weeks of deciding whether to proceed. Banking industry officials believe that the department wants to move ahead, and a top Treasury official hinted yesterday that officials are considering a trial run.

The issue surfaced yesterday during congressional testimony about another program that Treasury has used to monitor terrorist finances. That program, involving an international banking consortium known as the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, was disclosed last month by news reports.

The program under consideration would capture international transactions involving only U.S. banks, while the SWIFT system logs transfers across any international borders. But the Treasury would be free to use the data for investigations and crime-fighting beyond terrorism cases.

"We can use that information for terrorism, money-laundering, all sorts of law-enforcement purposes," Stuart Levey, Treasury's undersecretary for terrorism and financial intelligence, told the House Financial Services subcommittee on oversight and investigations. "And we can do all kinds of the things that people traditionally think about when they think about data mining in terms of looking for trend analysis, suspicious activity and the like."

Any new requirements for reporting transfers would go through a formal administrative rule-making process in which the public would have the right to comment before changes were made. The decision to proceed would be made by new Treasury Secretary Henry M. Paulson.

The proposal has prompted strong opposition from the banking industry, which contends that it would be unduly burdensome and would unnecessarily compromise the confidentiality of transactions.

Treasury officials believe they are on firm legal ground, but such a program would likely stir concerns over the privacy rights of ordinary citizens.

"This is giving the government the raw data. If you send money to your daughter in Europe, the government would know that you did it," said a banking industry lawyer who requested anonymity. "This is precisely the same kind of thing everyone is going nuts about on SWIFT."

Another major concern is whether the Treasury's Financial Crimes Enforcement Network, which is leading the effort, has the technical prowess to effectively search the data. Even supporters concede that it would take millions of dollars to upgrade department computers and software to massage the data coming from multiple sources.

Richard B. Schmitt writes for the Los Angeles Times.

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